Although the final numbers have yet to be tallied for 2011, it appears that Hope Now servicers modified roughly 1 million loans for the year just ended – a huge decline from 2010 when 1.76 million mortgages were restructured.
The Hope Now alliance reported that its member servicers completed nearly 83,000 loan modifications in November, including 26,900 HAMP and 57,000 proprietary restructurings.
A year ago, servicers completed 112,000 modifications in November.
In 3Q, alliance firms modified 255,670 mortgages, compared to 444,800 in the same period of 2010.
The 42% drop in modifications is only partially explained by the decline in delinquencies. Servicers reported nearly 2.8 million loans were 60-days or more past due in November compared to 4 million at the start of 2010.
The pipeline of seriously delinquent homeowners has fallen significantly, according to Hope Now executive director Faith Schwartz.
She point out that the unemployment rate is still high and servicers are extending forbearance to borrowers that don't have the income to make the necessary payments on a modified loan.
She also noted servicers are under consent orders, litigation and regulatory scrutiny, factors that have increased modification timelines. "Everyone is really making sure that every borrower who can get help -- does get help," Schwartz told NMN.
HN servicers also initiated 2.1 million foreclosure starts during the first 11 months of last year, compared to 2.4 million in 2010. Servicers completed 773,000 foreclosure sales during the 11-month period.
In a recent speech, Federal Reserve Bank of New York president William Dudley said current problems plaguing servicers are causing "inefficiently low levels of mortgage modification" and too many foreclosures.
"Absent more aggressive efforts to find economically efficient alternatives to foreclosure -- loans already seriously delinquent and in foreclosure will become real estate owned by the lender, or REO," he told the New Jersey Bankers Association last Friday.
"My staff estimates that the flow of properties into lender REO in 2012 and 2013 could be as high as 1.8 million per year, up from around 1.1 million in 2011 and around 600,000 in 2010," Dudley said.
